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Pursuant to ASC 810, noncontrolling interest holders are viewed as owners. ASC 230 indicates that financing activities include the provision of resources by owners and the return on, and return of, their investment. Therefore, dividends paid to noncontrolling interest holders should be classified as financing activities.
Cash paid to acquire a noncontrolling interest, or cash received from the sale of a noncontrolling interest, should be presented as a financing activity when the parent maintains control of the subsidiary. Cash received for the sale of an interest in a subsidiary should be classified as an investing activity in the consolidated statement of cash flows when the parent loses control of the subsidiary as a result of the transaction.
Because there is no guidance regarding transaction costs related to purchases and sales of noncontrolling interests, reporting entities may elect a policy to report such costs as either an expense in the income statement, or as a direct charge to equity. The classification of transaction costs in the cash flow statement should be consistent with that accounting. Therefore, if a reporting entity reflects transaction costs in its income statement, the related cash flows should be classified as an operating activity. If a reporting entity instead reflects the transaction costs as a direct charge to equity, the related cash flows should be classified as a financing activity.
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